Clinical studies supporting the role of lipids in the vascular damage associated with DR, including the DCCT/EDIC, ACCORD, Blue Mountain Eye Study and WESDR studies, suggest that retinal lipid levels may be more critical than circulating lipid levels. DR is not only the result of endothelial damage but also inadequate vascular repair. Dyslipidemia adversely impacts vascular repair by deleteriously affecting circulating angiogenic cells (CACs), a reparative bone marrow-derived (BMD) cell population. Dyslipidemia also promotes a proinflammatory environment in the retina and activates BMD inflammatory cells in particular monocytes. Thus, systemic and retinal lipid abnormalities simultaneously reduce vascular repair and also promote vascular damage by increasing inflammation. In this application, we provide insight into DR pathogenesis by examining a novel axis that unifies key lipid regulators, SIRT1 and liver X receptor (LXRa/LXR). SIRT1, a member of the sirtuin family of NAD-dependent protein deacetylases, is decreased in DR. The beneficial effects of SIRT1 on metabolism and inflammation were shown to be mediated through LXR activation. Previously, we showed that pharmacological activation of liver X receptor (LXRa/LXR) prevents DR in rodent models. In this proposal, we test the hypothesis that diabetes-induced disruption of the SIRT1-LXR axis results in abnormal lipid metabolism and inflammation. Strategies to stimulate this axis will result in activation of cellular and tissue cholesterol removal with normalization o cholesterol homeostasis and repression of the inflammatory genes, iNOS, IL-1, ICAM-1, and CCL2, in target tissues (retina) and cells (CACs and monocytes/macrophages). We put forth the following specific aims: Aim 1: To determine if activation of the SIRT1-LXR axis reverses diabetes-induced retinal damage through normalization of cholesterol homeostasis and reduction in iNOS, IL-1, ICAM- 1, and CCL2 inflammatory gene expression in the retina. Aim 2: To examine whether activation of the SIRT1-LXR axis reverses the diabetes-induced dysfunction of CACs and improves their reparative function by correcting CAC membrane fluidity towards normal to enhance migration out of the bone marrow (BM) and into areas of retinal injury and promote vascular repair. Aim 3: To determine whether activation of the SIRT1-LXR axis regulates the innate immune response resulting in a correction of diabetes-induced monocytosis and modulation of local and systemic macrophage/monocyte polarization.